APP customers: Hasbro and Lego

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Background - 26 November, 2011

In addition to identifying Mattel- and Disney-branded products linked to the destruction of Indonesian rainforests, Greenpeace investigations have identified a number of other major toy manufacturers, including Hasbro and LEGO, which produce merchandise in China that has tested positive for MTH in its paper products. Greenpeace has been able to establish links between APP and Hasbro and LEGO.

Hasbro is the second largest manufacturer in the global toy sector.

Many 'Made in China' toy products do not identify the packaging manufacturer.

One of LEGO's special edition Star Wars activity books is printed by Hung Hing, one of the top three importers of APP Indonesia paper in China. The cover tested positive for MTH.

Hasbro and Lego are major players

Hasbro is number two in toys

Hasbro is the second largest manufacturer in the global toy sector. The company's shares are traded on the NASDAQ Global Select Market. Hasbro is headquartered in Pawtucket, Rhode Island, USA. In 2010, Hasbro realised net sales in the amount of US$4.0 billion (€3.0 billion).[1]

About 50% of 2010 sales were in the USA.[2] Two thirds of sales[3] were of boys' toys - including characters and brands such as GI Joe, the Incredible Hulk, Indiana Jones, Spider-Man, SpongeBob, Sesame Street, the Simpsons, Star Wars and those produced under license to Disney (Mickey Mouse, High School Musical, Little Einsteins, Toy Story 3) - and games and puzzles such as Monopoly, Scrabble and Trivial Pursuit.[4]

Paper policy

Own production: Hasbro has 'set a goal that by 2011 at least 75% of its paper packaging will be derived from recycled material or sources that practice sustainable forest management'.[5] By 2015 it seeks to increase this to 90% for all its paperboard packaging and contents in box games.[6]

Products under license: Hasbro acknowledges its responsibility for merchandise produced under license, and it is 'working with [its] core toy and game licensees to help them put similar standards in place'.[7]

Current policy does not stop the Hasbro brand from being linked to companies that trade with companies involved in deforestation.

Lego is number four in toys

LEGO is the fourth largest manufacturer in the global toy sector.[8] LEGO is a family-owned, private company, headquartered in Billund, Denmark.[9]

The company's products are sold in over 130 countries.[10]

In 2010, the company's revenue relating to the sale of goods was DKK16.0 billion (€2.1 billion).[11]

Beyond LEGO's main product, it also produces products under license that include branded products from films or children's cartoons such as Star Wars, Harry Potter, Toy Story, SpongeBob and Indiana Jones.[12]

Paper policy

In May 2011, LEGO informed Greenpeace that it intended to investigate Greenpeace concerns around APP with its suppliers immediately. The company would be 'looking into securing that all packaging and printed materials for all LEGO branded products are sourced from sustainable resources [and] to a high extent consist of recycled content'.[13]

Where packaging material for LEGO requires use of virgin fibre as opposed to recycled content, LEGO only asks its suppliers to declare that they can 'at least document that packaging supplied to the LEGO Group does not contain wood fibers that can be traced back to [...] illegal [de]forestation; wood of threatened tree species; or any other illegal or corrupt business practices'.[14]

Whilst LEGO has recognised the importance of sourcing from FSC-certified mills,[15] its current systems are not robust enough to ensure that the fibre used in its packaging is from FSC-certified sources.

Products manufactured by third parties: LEGO has a code of conduct establishing minimum requirements 'to ensure that vendors and their subcontractors produce components and supply services to the LEGO Group in an ethical manner'.[16] For instance: 'Child labour must not be engaged in or benefited from. [...] Forced or compulsory labour must not be used or benefited from.'[17] However, under the heading 'Protection of the Environment', the code only requires that manufacturers comply with 'local laws and regulations regarding the protection of the environment'.[18]

LEGO does not require third parties to avoid trade with companies involved in deforestation.

Forensic evidence links Hasbro and LEGO to the destruction of Indonesia's rainforests

Hasbro

Expert forensic testing reveals that MTH is regularly found in a range of packaging and paper products for Hasbro-branded merchandise.[19] This evidence exposes Hasbro's role in the destruction of Indonesia's rainforests.

LEGO

Expert forensic testing of the topliner of the cover of a LEGO-branded product reveals the presence of MTH fibre.[21] This evidence exposes LEGO's role in the destruction of Indonesia's rainforests.

Greenpeace investigations link Hasbro and LEGO to APP

Hasbro

Hasbro has supply chain links to APP.

Certification indicates that APP is a Hasbro supplier

Like Mattel, Hasbro requires certification for materials, including paper products such as packaging, to attest that they meet its standards in terms of the exclusion or limitation of a range of hazardous chemicals.[23]

APP's main mill for packaging board in Indonesia - PT Indah Kiat Pulp & Paper Serang (IKPP), located on the island of Java - has received this certification for several of the paperboard brands[24] that it produces and trades both within Indonesia and to China. The mill is supplied by APP's pulp mills in Sumatra;[25] these source MTH from Indonesia's rainforests.

Within China, APP's Ningbo mill has received Hasbro certification for the production of paperboard.[26]

Hasbro supply chain[27]

Hasbro has outsourced much of its manufacturing to factories in China, including of board games such as Monopoly, Trivial Pursuit, The Game of Life, Twister and Scrabble and toys including Transformers and My Little Pony.

Preliminary forensic testing of a range of packaging for Hasbro-branded merchandise made in China identified the use of MTH.[28]

Labelling on Hasbro-branded board games purchased in China identifies QP Printing and Top Mix Industries as manufacturers. QP Printing also exports Hasbro-branded board games including Monopoly and Scrabble.[29] The Top Mix Industries website promotes the company as 'the appointed manufacturer of famous "Monopoly" game'.[30] Further manufacturers have been identified.

Preliminary Greenpeace investigations have established documentary evidence of trade links between manufacturers of Hasbro-branded merchandise and APP both in Indonesia and China.

In the absence of specific safeguards, paper products in particular from China or Indonesia have a high risk of being linked to APP and of driving destruction of Indonesia's rainforests.

LEGO[31]

LEGO has supply chain links to APP.

LEGO has an exclusive licensing agreement with Lucasfilm Ltd. granting the company the right to manufacture and market a series of LEGO sets based on themes from the original Star Wars trilogy and the three subsequent films.[32] Some of these special edition Star Wars products are published by Dorling Kindersley (part of the Penguin Group) and printed in China by printers with links to APP.

One printer of these products (Leo Paper)[33] was a 2009 winner of two 'Sinar Mas Print Awards' - a competition open only to customers of APP; another one (Hung Hing Printing) [34] belongs to the same group of companies as Sun Hing Paper.[35] According to confidential 2010 trade data, Sun Hing Paper is one of China's top three importers of APP Indonesia paper. Forensic testing of one of the special edition Star Wars products produced by Hung Hing revealed MTH.

Just the tip of the iceberg?

These links to APP and evidence of rainforest fibre in LEGO's and Hasbro's supply chains are likely to be just the tip of the iceberg for these companies and other major toy manufacturers.

China is increasingly a hub for manufacturing in the toy sector. For instance, packaging on recent LEGO products reveals that the products are now increasingly produced in China; traditionally, most products have been produced in Denmark or other European countries.

In the absence of specific safeguards, paper products from China or Indonesia have a high risk of being linked to APP and of driving destruction of Indonesia's rainforests.